Spike in Store Closures Thwarts Central N.J. Retail Vacancy Improvement
The New Jersey commercial real estate market can’t seem to get a break. A jump in vacancies on Route 35 offset improvements on other roads, according to the 21st annual study of the central New Jersey retail property market, conducted by R.J. Brunelli & Co., Inc. The vacancy rate along central New Jersey’s four largest shopping corridors--the 30.01 million square feet of space along State Highways 1, 9, 18 and 35 in Mercer, Middlesex, Monmouth, and Ocean County counties--reached 9.8 percent by late spring.
Vacancies in these counties have escalated over the last four consecutive years, but commercial real estate experts were optimistic after recently improved showings on Routes 1, 9 and 18--until a new spike in store closures along Route 35 countered the positive effects. The Old Bridge, N.J.-based retail real estate brokerage evaluated shopping centers and freestanding buildings exceeding 2,000 square feet--including restaurants and auto service facilities. Regional malls and centers under construction or major redevelopment were excluded from the survey.
The firm chose to conduct the study during the spring, instead of its typical February time period. The firm believed that waiting until after the holiday season would give a better, ‘post-shakeout” view of the market, because retailers typically begin liquidating failing store inventories during that time.
Vacant auto dealerships along the highways whose location and configuration makes them suitable for retail use were also part of the study. Dealerships were included because, after so many dealer consolidations in the past year, many of the empty sites are likely to be transformed into non-automotive uses. And, most of the properties can be successfully converted to retail or restaurant use because of their ample parking and great exposure.
The study noted that retail properties throughout central New Jersey will continue to feel pressure from the large number of big-box store vacancies, many of which have been empty for several years. In fact, together, vacant spaces of 20,000 square feet or more account for approximately 1.50 million square feet--51.3 percent--of the available space along the four corridors.